Russian wheat export prices unlikely to rise

Russia's wheat export prices are unlikely to rise following the removal of a state export tax because traders need to clear stocks before the start of the new season, analysts said. Last Friday the government lifted the duty on wheat exports, initially set to cool domestic food inflation, to help domestic producers. It plans to introduce a new export tax, calculated under a different formula, from July 1.
"One can hardly expect a significant growth in prices in ports in the current conditions," SovEcon agriculture analysts said in a note. Exporters are selling their stock ahead of the new season that starts on July 1, while a stronger rouble also constrains prices, it added. Officials are now discussing the new formula, which envisages exporters paying $1 per tonne in duty as long as the domestic price does not exceed 12,000 roubles ($242) per tonne.
Black Sea forward prices for Russian new crop wheat with 12.5 percent protein content stood at $189 per tonne on a free-on-board (FOB) basis at the end of last week, down $2-3 from late April, the IKAR agriculture consultancy said. It quoted prices for the old crop at $193 per tonne, while SovEcon pegged them at $190 per tonne.
Domestic prices for third-class wheat were up 50 roubles compared with a week earlier, at 9,175 roubles ($185) per tonne in the European part of Russia on an ex-works basis, SovEcon added. On the supply side, the Agriculture Ministry has kept its 2015 grain crop forecast at up to 100 million tonnes, down 5 million tonnes from a near-record crop in 2014, and has cut the estimate of winter grain area loss by 0.5 million to 1.3 million hectares.
Cool weather has delayed Russia's spring grain sowing by 2 million hectares compared with last year to 14 million hectares, but the pace of sowing remains at an average level of many years, SovEcon added. The government has bought 850,000 tonnes of grain for its stocks on the domestic market since the start of the current programme last autumn, including 66,100 tonnes bought last week. In the domestic sunflower seed market, SovEcon said prices fell 50 roubles to 20,550 roubles per tonne, while FOB Black Sea prices for crude sunflower oil were up $20 to $820-840 per tonne.